New SFO rules add to cabdrivers’ woes
Some medallion holders now face limit on pickups
Some San Francisco taxi drivers, their business already devastated with the advent of Uber and Lyft, say they face a new threat to their livelihoods.
The San Francisco Municipal Transportation Agency imposed new rules this month that restrict airport pickups for more than half of the city’s 1,500 medallion holders.
The agency is giving SFO preference to 558 drivers who bought $250,000 medallions under a program that started about 10 years ago. Most other medallion holders got their medallions — a tin permit allowing them to operate their own cab — free after waiting for years on a seniority list. Now those drivers say they’re being treated
“It’s difficult enough with Uber and Lyft, but this adds fuel to the fire.” Dennis Korkos, taxi driver and K medallion holder
as second-class citizens by their regulator, curtailed from their most lucrative fares, with their cabs less desirable for rentals by other drivers.
The MTA wants to make the paid medallions more valuable to help those drivers with their loan payments. Some 163 have lost their medallions to foreclosure in recent years as the industry struggles against cheaper, more numerous app-hailed rivals. It’s been almost three years since anyone bought a San Francisco taxi medallion, while 271 medallion holders languish on a list seeking buyers.
The San Francisco Federal Credit Union, which issued the medallion loans, sued the MTA last year, claiming it let the taxi market collapse after devising the paid medallion system as a cash cow — leaving the credit union holding the bag. A Superior Court judge last summer found that the case had enough merit to proceed.
Kate Toran, the agency’s director of taxis and accessible services, defended the changes, which the MTA board passed in October and implemented this month, as a way to shore up the struggling taxi business by buttressing “paid medallion holders, who have invested the most in the industry and earned the least.”
The agency originally planned to ban airport pickups for all non-paid medallion holders, but after vociferous driver protests, agreed to a system where paid medallions had priority access, while the wait-list medallions could get limited access to SFO pickups.
An airport employee called a starter, who stands at the taxi lot junctures and waves drivers forward, determines whether it’s one out of every three, five or seven rides that’s granted to the 569 wait-list medallions called K medallions after the 1978 proposition that authorized the list. Another 272 medallions, largely owned by people who do not drive them, are barred from airport pickups.
For the K medallion drivers, that makes an already long wait for airport fares interminable.
“It’s difficult enough with Uber and Lyft, but this adds fuel to the fire,” said Dennis Korkos, a driver since 1981 who received a K medallion in 2004. “I’ve tried twice to go to the airport (since the change), and it was very sluggish. I just can’t do this long, long wait.”
Medallion holders typically rent their permits to other drivers when they’re not using them themselves, often via a cab company. Medallions used to rent for about $2,000 a month, but that has dwindled to just a few hundred dollars as Uber and Lyft became ascendent. Ride-hail drivers picking up at the airport pay fees but have no limit.
Now, with the airport restrictions, “we will have limited drivers wanting to rent them, and they will become worthless,” Korkos said.
Marcelo Fonseca, a driver for 30 years who got his medallion after 15 years on the waiting list, said he fears he’ll be forced to drive longer hours and work more shifts to make up for the lost revenue.
“I’m afraid that (in the near future) Yellow Cab will say, ‘We don’t want your medallion anymore; you’ll have to be totally on your own, buy a vehicle, pay insurance, do maintenance,’ ” he said.
The situation is demoralizing and depressing, he said, especially since it pits drivers against one another. “The MTA is robbing Peter to pay Paul.”
Taxi companies are not fans of the new system either.
“All the data show: Drivers cannot make a living unless they have access to the airport,” said Chris Sweiss, CEO of Big Dog City Corp., which controls 500 cabs under the brands Yellow Cab, Luxor and CityWide. “This is a bad idea and won’t help the taxi industry. It’s horrible governance. How do people who buy medallions know that 10 years down the line the MTA won’t put in regulations that devalue them?”
Along with other companies and drivers, Big Dog has formed a group called the San Francisco Taxi Coalition that said it plans this month to sue the MTA over the rules and ask for an injunction to halt them.
“As regulator, SFMTA has a duty to base its decisions on the best interests of the riding public and also industry stakeholders,” said Carl Macmurdo, a driver for 35 years and president of the Medallion Holders Association. Instead, he thinks the agency is trying to mitigate damages from the credit union lawsuit.
But the MTA’s Toran said neither charge is true. The agency wants to help the public and the industry, she said, and the reforms were in progress before the lawsuit was filed.
Limiting airport pickups “will improve taxi supply in the city,” she said. “We see it as a waste of resources when the fleet just waits hours on end for one trip out at SFO.”
The agency will assess the changes in a few months to see if they’ve met such goals as reducing SFO wait time and increasing revenue for paid medallion holders, increasing taxis in the city and providing more incentives for wheelchairaccessible taxis (which can earn expedited SFO access by completing a certain number of paratransit and wheelchair trips a month).
John Oliver, CEO of the SF Federal Credit Union, said the reforms are a Band-Aid solution to a systemic issue.
“It’s a futile effort by the MTA to act like they’re doing something material, but it won’t change the landscape,” he said. “While it adds a little bit of intrinsic value to the paid medallions, it’s nowhere close to getting someone to want to purchase one at $250,000.”
He wants the city to subsidize medallion sales at a more reasonable price, perhaps $125,000. “The market is virtually dead now,” he said. Revenue sources could be the $64 million the city reaped from the initial sales, as well as the fees that ride-hailing drivers pay at the airport and for business licenses, he said.
The reforms allow the credit union to rent out the foreclosed medallions. So far it’s placed about 50 into service through Yellow Cab. Other cab companies are interested as well, since they include expedited airport access. Rental prices, about $500 to $700 a month, are set by an auction process. That revenue may help offset any damages awarded in the lawsuit, Oliver said.
But that’s also stirred driver controversy, as more medallions increase the airport competition.
Oliver sees plenty of sad ironies in the situation.
“San Francisco is an iconic city known for inclusion, trying to provide the American dream, helping out the underprivileged,” he said. “Here you have a group of almost 100 percent immigrants coming here to try to make a life for themselves, putting their life savings in medallions, and the rug was pulled out from under them.”